This case just went from interesting to fascinating
Last month, we reported on widespread concerns about Yelp's business practices, specifically their spam review filters, which some say, are nothing more than extortion. Many small business owners claim that after they turned down Yelp's advertising overtures, their positive reviews were filtered out, and negative reviews were given more prominent placement.
One of those disgruntled small business owners was a San Diego law firm, which filed suit and won, with the small claims judge comparing Yelp's practices to the mafia. However, Julian McMillian's victory was short-lived, as late last month, an appellate court overturned the decision, and now, he's the defendant in a separate lawsuit, with Yelp claiming that McMillian was posting fake reviews.
Reversal and Arbitration
McMillian was briefly an advertising customer with Yelp, but he claims that he didn't get what he paid for. Unfortunately, he also agreed to a contract, and that contract contained an arbitration clause.
That clause, by the way, requires the arbitration to take place in front of the American Arbitration Association in San Francisco, right near Yelp's headquarters. For McMillian, taking his small claims case to an arbiter more than 500 miles away will likely negate any benefit of actually pursuing the claim.
Alas, the appeals court cited the Supreme Court's business-friendly opinion from earlier this year, American Express v. Italian Colors, which held that such clauses are to be enforced, even when they price vindication out of the consumer's reach.
Fake Reviews Lawsuit
If that wasn't bad enough, Yelp also filed a lawsuit against McMillian for allegedly posting fake reviews to his own Yelp page, as well as others' pages, pursuant to a quid pro quo arrangement with other local attorneys.
Yelp's complaint is littered with accusations of employees creating Yelp accounts to post reviews, many of them using variants of their own names, but posting as clients. The review were traced to the IP (Internet Protocol) addresses associated with McMIllian's law firm.
Yelp is seeking damages for breach of contract by violating its terms of service, for intentional interference with contractual relations (by harming the site's reputation via fake reviews), for unfair competition, and for false advertising.
The lawsuit was filed less than a week before McMillian's small claims victory was overturned by the appeals court.
- Amex v. Italian Colors: Another Arb. Decision Favors Clear Clauses (FindLaw's In House Blog)
- Yelp! Negative Reviews Require Professionalism, Ethics (FindLaw's Strategist Blog)
- Yelp Sues Law Firm for Posting Fake Reviews, Testimonials (FindLaw via Scribd)